New ethanol plant in Texas could be online by August 2007

New York (Platts)--26Apr2006

A new 100 million gal/year ethanol plant in Hereford, Texas, will be
producing as soon as August 2007, the plant owner's CEO said in an interview
Wednesday. Kevin Kuykendall, of White Energy Ltd, said plant construction is
set to begin in June, with 14 months scheduled to complete it.

The company will announce in a few weeks its plan for marketing and
selling the ethanol. It will likely contract with an ethanol marketing company
for this purpose, Kuykendall said. Most of the ethanol would likely be
delivered by rail to blending locations in Amarillo, Texas; Lubbock, Texas;
and Dallas/Fort Worth, with some possibly being railed to markets in Arizona
and California, he said.

White Energy is a subsidiary of Dallas-based venture capital firm White
Ventures. Its move into the ethanol business includes an acquisition,
announced last week, of US Energy Partners, which owns a 40 million gal/year
ethanol plant in Russell, Kansas. It also hopes to build two other 100 million
gal/year ethanol plants in Texas and acquire two other existing plants,
Kuykendall said. He would not disclose details of White Energy's growth
strategy, saying it was too early to do so.

Only a handful of US ethanol plants have a capacity of 100 million
gal/year, although expansions in progress at at least six plants will bring
those plants up to that level, according to data from the ethanol industry's
main trade group, the Renewable Fuels Association. Most of the existing 97 US
plants have capacities of about 20 million-50 million gal/year.

White Energy's Hereford plant is being built next to a grain elevator
owned and operated by Archer-Daniels-Midland (ADM), where White Energy will
store grain to be used as feedstock, White said previously. ADM is the largest
US ethanol producer, with a capacity of more than 1 billion gal/year,
according to the Renewable Fuels Association.

Kuykendall would not disclose the cost of the Hereford plant or funding
details, saying the information would be made public when the company unveils
its marketing plans.

White Energy has received a $700,000 grant from the state of Texas to be
used toward "infrastructure" in the plant project, Kuykendall said, while the
local government is giving the company "tax incentives." The plant is expected
to employ 41 workers.

The plant, located in the Texas Panhandle, is actually one of two ethanol
plants to be built there. Dallas-based Panda Energy is also building a 100
million gal/year plant in Hereford, about four miles from the White Energy
location.

The Panda Energy plant would be powered from steam produced by burning
cow manure, said Don Cumpton, economic development administrator for Deaf
Smith County, Texas, where Hereford is located. Cumpton is working with Panda
Energy and White Energy on the ethanol plants projects. No one from Panda
Energy was immediately available for comment.

White Energy's plant would be powered by traditional corn and sorghum
feedstock, Kuykendall said. Both plants will produce a wet grain by-product
which will have a large local market, given Hereford's massive cattle
population. "We have about two million cattle here in a 100-mile square
radius," Kuykendall said.

In addition to the two Hereford plants, there are at least two other
ethanol plants planned for the Texas Panhandle, including a 40-million
gal/year plant to be built in Levelland, expected to come online as early as
June 2007, and a 50-million gal/year plant in Sunray, northeast of Dumas,
would could also be operating as soon as the summer of 2007.

The Renewable Fuels Association lists 33 new ethanol plants under
construction and nine plant expansions. This is in addition to the existing 97
plants, most of them clustered in the Midwest cornbelt.

--Xavier A Cronin, xavier_cronin@platts.com

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